The mouse is mightier than the pen

With the recent signing of five ISO clients, SignatureLink Inc. seems to be entering cruise mode. The Jackson, Miss.-based company is riding the wave of sea change in a world that's shifting toward wireless, paperless solutions.

SignatureLink's role boils down to one fundamental thing: the use of digital signatures in place of paper and ink.

SignatureLink was founded in 2005, and the history of its creation is unusual. According to Chito Collins, Lead Sales and Marketing Consultant for SignatureLink, the company was formed when Cypress Funding LLC., a venture capital firm, bought the rights to its digital signature technology from two young inventors.

"Two kids apparently created the technology, and Cypress eventually bought them out," Collins said. "Later, they brought in [a management team] and migrated the platform to be scalable and highly redundant to play with the big merchants and big ISO partners."

The David Nutt factor

According to Greg Stamitis, SignatureLink's Chief Operating Officer, part of the driving force behind Cypress' acquisition relates to the venture capital company's connection to a Mississippi law firm called David Nutt and Associates. Mr. Nutt is a Principal at Cypress Funding, and his interest in investing in digital signature technology was driven by his experience as a lawyer, Stamatis noted.

"Mr. Nutt, being an attorney, understood the need and significance of a signature on a document," Stamatis said. "He realized [digital signatures] were a pretty neat thing, and when he found we had the ability to do it over the web remotely he saw the potential of signatures being used anywhere you need one. I think that's the basis of the story: he understood that signatures are a time honored standard from the day they started putting the king's seal on documents. Signatures are a holy grail."

SignatureLink's products all relate to digital authentication of some kind, although each solution is tailored to fit the needs of a particular client, Stamatis added.

"Merchant providers have a very specific workflow on how their documents flow through their process, and we're able to help them integrate an electronic signature into their work flow," he said. "They may, for example, use a multipart form where a company representative fills out the first part, sends it to a client who fills out and signs the second part, then it goes to an approver who signs and approves the final contract. We have the ability to facilitate that entire work flow."

The company's central payment-related offering is an e-commerce digital signature option called SignatureSafe, which allows consumers to sign for transactions using either a mouse or a touch pad. The product has a track record of minimizing merchant chargebacks, particularly those related to friendly fraud, Collins said.

Customers who disavow online transactions usually have an easier time getting reimbursed precisely because card-not-present transactions tend not to be authenticated with either a signature or a PIN. But SignatureSafe prevents unwarranted chargebacks because a customer's signature is unique and personal - even with a mouse.

If a customer who disavows a purchase has signed for that purchase, his or her biometric imprint all but proves ownership of that transaction,

Double biometric authentication

Collins said SignatureSafe's software makes its mouse- and touch pad-based signatures even better authenticators than conventional signatures because the program captures both the signature itself and the unique manner in which a signature is drawn. Together, those two biometric identifiers make every signature unique and inimitable, Collins said.

"We are utilizing the service for our e-commerce merchants to help protect them against chargebacks," said Justin Milmeister, President and founder of Elite Merchant Solutions, a SignatureLink client.

"It's another line of defense for your card-not-present transactions. It allows our clients to get a signature, and it does help protect them when a chargeback comes in.

"We find it most useful for our larger ticket guys that are selling certain things where the average tickets are considerable and this provides a good, solid defense where they potentially stand to lose a lot of money."

Milmeister added that EMS plans to also use Signature Link's Electronic Agreements Solution for boarding merchants because it not only provides convenience, but also protects against attrition.

"You go online, fill out our application and sign right then and there," Milmeister said. "Everything's done online, and then we're good to go. Rather than having to fax or email it to them, it shortens the sale cycle and gives you the chance to strike while the iron's hot. Now you can do with one phone call what would be two to three.

"Usually it's fax me the paperwork and I'll follow up with you, and you know how that goes. Where with this they just fill out and submit, and what was a process of chasing the merchants trying to get the paperwork back, now we can just do all of that in one call."

Sell to and through

Collins said SignatureLink sells its products both directly to merchants and indirectly through ISOs. Merchant service providers who carry the product usually offer it to their merchants as an optional service, she said.

She added that many ISOs use it to board new merchants and then sell it to those same merchants for use in the e-commerce sector.

"Our model is basically the sell to and sell through model," Collins said. "Our customers can resell it, white label it - whatever. We don't care."

Other than its electronic agreement and traditional e-commerce pieces, SignatureLink's authentication software is also used for remote authorizations - such as those used with prescription drug transactions - and with smart phones. Collins said clients use SignatureSafe for credit, debit, online check and automated clearing house (ACH) transactions in conjunction with both traditional online and smart-phone transactions.

"The key for e-check and ACH payment methods is, if there's a dispute, it's very different than credit cards," Collins said. "With credit cards you're liable for at most $50; for [contesting] ACH you literally have to go to the bank to be fingerprinted and sign an affidavit saying you did not buy it online and provide a legally binding wet signature. With our signature capture, you can do that online."

Front-end authentication

Collins said SignatureLink's products are generally used retroactively, meaning signatures are analyzed for authenticity only after a transaction is disputed. But she said the company plans to eventually use a front-end authenticator that validates or invalidates transactions at the POS by comparing customer signatures to ones stored on file.

Collins said merchant and ISO interest in SignatureLink's products has grown in concert with the company's offer of a 90-day free trial period, along with the explosion of mobile commerce and the growth of ACH transactions.

"Cell phones and payments via cell phone have made authorization and validation that a consumer transferred money or made payments more critical than ever," she said. "Companies that make the phone the most authenticated tool ever will succeed the most; people need to understand that it's all about mobility, and that everything is going wireless.

"The key for us is going to be having that web signature on file. It's really a deterrent that stops a lot of consumers from the 'I did not buy that' syndrome. It makes them think twice."

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